JFR Finally Puts out a Release (1 Viewer)

[Luke Nieuwhof]

How relevant is TV air time anymore, at least in the context of a logo on a screen? Advertising has changed so much in recent years, and I don’t think logo exposure cuts it anymore.
Most of the sponsorship in motorsport is by people who already like motorsport I feel - not that this is unusual in sports.

 

[none]

NHRA gives sponsors 4 seconds of exposure for maybe 4 rounds so 16 seconds to win. Nascar gets 3 hours win or lose. The big money is drying up, Schumacher, Kalitta, and Force are old, kids don't even care about cars. Grudge racing, No Prep are hot. As long as there are 2 cars people will see who is faster. But the 3 million a year per car teams are history. IMO of course....

Bob,

Do you honestly think that a company pays 3 million (or even $100) and then just sits back and waits to see it on TV?
If kids don't care about cars, why do they watch Grudge and No Prep racing. Aren't those cars?

There are many levels of sponsorship, and many layers.

Using a NASCAR example, one of the most successful was the DuPont deal for Jeff Gordon. Do you think they were spending that money because people watching TV were buying DuPont paint and painting their own car?

Or an NHRA example, is DHL here because they want the people watching TV to use them next Christmas shipping gifts to aunt Nancy?

Both use racing to make a business to business connection. That's how they make the deals work TV exposure is a plus, but it's not the main thrust of the sponsorship.

Alan

 

[camaro]

if i was gonna dedicate 3 mil in sponsorship to drag racing, i would spread out the funding, rather than give it to one team. I 'd give 2 mil to a nitro team and give the rest to racers in the other categories, that appear on TV. ie psc / psb / pm . they would serve as insurance for exposure, in the event the nitro car loses early! 1 mil could probably get your name on a few cars/bikes considering the majority of them do not have any backing and would take whatever they can get. remember the super teams of McDonald s , Castrol, Rod Shop, Budweiser etc.

 

[none]

if i was gonna dedicate 3 mil in sponsorship to drag racing, i would spread out the funding, rather than give it to one team. I 'd give 2 mil to a nitro team and give the rest to racers in the other categories, that appear on TV. ie psc / psb / pm . they would serve as insurance for exposure, in the event the nitro car loses early! 1 mil could probably get your name on a few cars/bikes considering the majority of them do not have any backing and would take whatever they can get. remember the super teams of McDonald s , Castrol, Rod Shop, Budweiser etc.

Not arguing, just discussing. You are operating on the assumption that TV exposure is what the sponsor is after. What if that's not the goal?

For some being seen on TV is a bigger part than others, but for some being on TV is nice, but it's not where the sales come from. And it's not what the deal is based on.

The ARMY for example, wasn't there because they thought that someone seeing Tony win on TV would make them want to join the ARMY. If Tony did win, and spend time on TV that was a bonus but the main focus of the ARMY was recruiting. Tony every week spoke to the high school and college students that came out to the NHRA "YES" (Youth and Education Services) program. Tony also made a couple of hundred speeches a year as a "recruiting agent". That's what the sponsorship was driven by. If Tony had never won a race, but was successful it getting young people to look at the ARMY as an option out of high school or to continue school he did his job. And he did it well enough to keep them involved for 20 years.

If the only goal is to be seen on TV, then as a sponsor, buy adds that run in the program. You are guaranteed to see your name on TV during the races. And if you buy 6 adds over the two hours, your adds will run, there no chance that after the first half hour you won't be seen again.

Kenny Bernstein was one of the first who really perfected the art of pit-side hospitality. In the early days, the name on the car and the car on TV as well as doing appearances and such was enough. But Kenny realized that there was much more out there. This is an over simplification but it worked kind of like this.

Kenny calls the local distributor, and says "How would you like to offer your customers a day at the races with VIP treatment as a member of the team? I have 25 available per day. Meet and great, pit tour, picture with me, team shirt, etc." The cost is X

The distributor calls his customers and makes that offer to them. But, in order to get the package they need to sell more Budweiser. So if it's a bar, they make it a Happy Hour Special for the month, or every BUD purchased gets you into the drawing for something. Maybe even sell X amount and Kenny will come to your bar on Thursday before the race.

If it's a convenience store chain, they put Bud on sale for a month. They put up a KB cardboard cutout, or a signs in the window. Whatever they have to do to sell more beer.

Kenny has now helped the local distributor sell beer, that's good for corporate as well. And If he wins? That's a bonus, if he loses 1st round, Budweiser has still gotten their monies worth.

That's just one example.

Alan

 

[camaro]

i wont profess to being knowledgeable about what sponsors want so i'll pose the question, why do so many sponsors get into drag racing and stay for a short period of time. what would be the primary reason they decide not to stay ? Alan R. gave an example so i'll give one too. Remember when Summit Racing sponsored Mark Pawuk. They jump ship and sent all their funding to Greg Anderson. Why? i'm guessing because Greg was winning every race on the calendar and on TV and on the track more than anyone else ! and speaking of Bernstein, remember when Budweiser left him and that 'Copart' company took over as the primary, Well if memory serves Brandon had a bad year and lost early and often and i remember wondering what the guy, who cut the Bernsteins a check, was thinking when his car was on the trailer every Sunday before noon!

 

[mick]

any of us smart enough to throw a few bucks at copart stock back when they started with bernsteins would have now been rewarded handsomely. i was not one of those people.

 

[none]

Every deal is different, if you are in the performance business then you want your car to perform. There is also a rule of thumb that for every dollar you spend on sponsorship you should spend a dollar on activation.

Let's say Reinhart's Speed Shop wants to sponsor James Forney and his Pro Stock team. I need James to perform, because I want people to think that if they buy my parts their car will run like his. I also am going to activate, by purchasing ads in the TV show and maybe a couple of billboards near the track. So people see James run good, and I am showing them how to do business with me. If James wins the championship I am going to activate on TV as well as in every magazine on line and in print telling people that if you want to be a Champion like James then you should be buying parts from me! If James doesn't perform well, then none of it works.

Did you know that teams have also fired sponsors? Because you have to spell out what is expected and what is being paid for. I'm not naming names, but believe it.

Reinhart's Speed Shop makes a deal with James and his Pro Stock Team. I'm paying him $100 to put my name on his car and hauler. We sign the deal. Now, I need him to bring the car and do a display at my company headquarters for my annual sales convention. That was not ever discussed, but I'm his sponsor, so he says, OK I'll send my rig and I'll fly in for the day. Then I want to use his car in my commercial, I need to have the car in L.A. Tuesday after Vegas for the shoot, even though the next race is Houston. He has made plans for the truck driving team to go to Houston and fly home for a couple of days before the race. He calls me and says: "This is going to cost $20 to change plane tickets and pay for the fuel and hotels in L.A." I say: "I'm your sponsor, and if you want the $100 to continue you will have the car in L.A." OK, he gives in and sends the car to L.A. for the shoot. And eats the $20 expense. Then I tell him: "I want to wrap the car for my home race in Indy, It's my 25th year in business and I want uniforms banners and the works." He says: "This wasn't part of the $100 deal, and it will cost an extra $10. I'm already out the expense for the display and the commercial shoot. You need to pony up or I can't do it." I say no. He fires me.

It might end up in court, but look at it like this, if I hire you to put in my concrete driveway and after I pay for it, I insist that you do a sidewalk as well, how would that work. You would do the work you contracted for. At least I would.

It has happened, more recently than you think.

As for the Copart deal, I know a couple things that it's not my place to say. But do you really believe that being on TV was the primary focus of that deal? It had many layers. And if on track performance was the be all end all why have sponsors left after having a great year? There is always more than meets the eye.

Alan

 

[Huge]

Every deal is different, if you are in the performance business then you want your car to perform. There is also a rule of thumb that for every dollar you spend on sponsorship you should spend a dollar on activation.

Let's say Reinhart's Speed Shop wants to sponsor James Forney and his Pro Stock team. I need James to perform, because I want people to think that if they buy my parts their car will run like his. I also am going to activate, by purchasing ads in the TV show and maybe a couple of billboards near the track. So people see James run good, and I am showing them how to do business with me. If James wins the championship I am going to activate on TV as well as in every magazine on line and in print telling people that if you want to be a Champion like James then you should be buying parts from me! If James doesn't perform well, then none of it works.

Did you know that teams have also fired sponsors? Because you have to spell out what is expected and what is being paid for. I'm not naming names, but believe it.

Reinhart's Speed Shop makes a deal with James and his Pro Stock Team. I'm paying him $100 to put my name on his car and hauler. We sign the deal. Now, I need him to bring the car and do a display at my company headquarters for my annual sales convention. That was not ever discussed, but I'm his sponsor, so he says, OK I'll send my rig and I'll fly in for the day. Then I want to use his car in my commercial, I need to have the car in L.A. Tuesday after Vegas for the shoot, even though the next race is Houston. He has made plans for the truck driving team to go to Houston and fly home for a couple of days before the race. He calls me and says: "This is going to cost $20 to change plane tickets and pay for the fuel and hotels in L.A." I say: "I'm your sponsor, and if you want the $100 to continue you will have the car in L.A." OK, he gives in and sends the car to L.A. for the shoot. And eats the $20 expense. Then I tell him: "I want to wrap the car for my home race in Indy, It's my 25th year in business and I want uniforms banners and the works." He says: "This wasn't part of the $100 deal, and it will cost an extra $10. I'm already out the expense for the display and the commercial shoot. You need to pony up or I can't do it." I say no. He fires me.

It might end up in court, but look at it like this, if I hire you to put in my concrete driveway and after I pay for it, I insist that you do a sidewalk as well, how would that work. You would do the work you contracted for. At least I would.

It has happened, more recently than you think.

As for the Copart deal, I know a couple things that it's not my place to say. But do you really believe that being on TV was the primary focus of that deal? It had many layers. And if on track performance was the be all end all why have sponsors left after having a great year? There is always more than meets the eye.

Alan

You must have been hypothetically sponsoring him in 1958.

 

[Mike]

One thing that has been left out, who is the head of marketing. Tough sell for sponsorship if they have no interest in motorsports.

 

[camaro]

not arguing just discussing! but if a company is expecting me to spend more money than what there sponsorship is worth, than they'r more of a 'leech' than a sponsor ey! Maybe i'm missing your point, but i gotta believe both parties, in your example, would realize you cant expect a guy to spend $150 when i only paid him $100. And finally, I'm asking because i dont know, but what are these other Layers of the non B to B sponsorships, that's being referred to? aside from the TV broadcast exposure and the Fans attending the races, what else is there? A hand full of internet sites, some personal appearances at the occasional Walmart??. do any of these have major exposure that would justify a 3 million dollar check. Of course as i'm typing this post, two words come to mind to stress your point. ' Jim Dunn' !! that team has underachieved for 2 decades and yet always seem to have a name on the side of the car

 

[megadeth]

Every deal is different, if you are in the performance business then you want your car to perform. There is also a rule of thumb that for every dollar you spend on sponsorship you should spend a dollar on activation.

Let's say Reinhart's Speed Shop wants to sponsor James Forney and his Pro Stock team. I need James to perform, because I want people to think that if they buy my parts their car will run like his. I also am going to activate, by purchasing ads in the TV show and maybe a couple of billboards near the track. So people see James run good, and I am showing them how to do business with me. If James wins the championship I am going to activate on TV as well as in every magazine on line and in print telling people that if you want to be a Champion like James then you should be buying parts from me! If James doesn't perform well, then none of it works.

Did you know that teams have also fired sponsors? Because you have to spell out what is expected and what is being paid for. I'm not naming names, but believe it.

Reinhart's Speed Shop makes a deal with James and his Pro Stock Team. I'm paying him $100 to put my name on his car and hauler. We sign the deal. Now, I need him to bring the car and do a display at my company headquarters for my annual sales convention. That was not ever discussed, but I'm his sponsor, so he says, OK I'll send my rig and I'll fly in for the day. Then I want to use his car in my commercial, I need to have the car in L.A. Tuesday after Vegas for the shoot, even though the next race is Houston. He has made plans for the truck driving team to go to Houston and fly home for a couple of days before the race. He calls me and says: "This is going to cost $20 to change plane tickets and pay for the fuel and hotels in L.A." I say: "I'm your sponsor, and if you want the $100 to continue you will have the car in L.A." OK, he gives in and sends the car to L.A. for the shoot. And eats the $20 expense. Then I tell him: "I want to wrap the car for my home race in Indy, It's my 25th year in business and I want uniforms banners and the works." He says: "This wasn't part of the $100 deal, and it will cost an extra $10. I'm already out the expense for the display and the commercial shoot. You need to pony up or I can't do it." I say no. He fires me.

It might end up in court, but look at it like this, if I hire you to put in my concrete driveway and after I pay for it, I insist that you do a sidewalk as well, how would that work. You would do the work you contracted for. At least I would.

It has happened, more recently than you think.

As for the Copart deal, I know a couple things that it's not my place to say. But do you really believe that being on TV was the primary focus of that deal? It had many layers. And if on track performance was the be all end all why have sponsors left after having a great year? There is always more than meets the eye.

Alan

Thats why some of the better funded teams have display cars! I remember I went to a Ozzfest at shoreline and Jerry Toliver had his display car on the grounds! It garnered a lot of attention for the crowd with the race in Sonoma happing the following weekend.

 

[none]

There are as many different B2B opportunities as there are sponsors. It is in simple terms companies helping each other, usually with things that they have to do anyway.

Let's say that Forney Motorsports has a four car NASCAR team, he also owns 30 new car dealerships. How many oil changes do they do in a year? So you reach out to Reinhart Oil and say, I would like you to sponsor my NASCAR effort, and as part of the deal all of my dealerships will use Reinhart Oil exclusively. Reinhart Oil now has signage on every racecar including primary sponsorship at five races as well as signs in every dealership and can advertise that Forney Motorsports wins with Reinhart Oil.

Forney Auto Group has to buy oil form someone, and he now gets a discount because he is buying a TON of it for all the dealerships, and he gets a sponsor for his NASCAR teams. Reinhart Oil gets a huge customer, and all the advertising signage (racecars and dealerships) and makes enough profit selling oil to the auto group to pay for the sponsorship.

And since Forney is a smart guy, he also introduces Reinhart Oil to Timm Truck Leasing who is also a sponsor of his NASCAR organisation. Because Timm Truck Leasing has to buy oil, and Reinhart Oil uses trucks to deliver their stuff. So they help each other out. And Forney builds good will between himself and two of his partner/sponsors. A classic B2B deal.

Alan

 

[Pete]

There are as many different B2B opportunities as there are sponsors. It is in simple terms companies helping each other, usually with things that they have to do anyway.

Let's say that Forney Motorsports has a four car NASCAR team, he also owns 30 new car dealerships. How many oil changes do they do in a year? So you reach out to Reinhart Oil and say, I would like you to sponsor my NASCAR effort, and as part of the deal all of my dealerships will use Reinhart Oil exclusively. Reinhart Oil now has signage on every racecar including primary sponsorship at five races as well as signs in every dealership and can advertise that Forney Motorsports wins with Reinhart Oil.

Forney Auto Group has to buy oil form someone, and he now gets a discount because he is buying a TON of it for all the dealerships, and he gets a sponsor for his NASCAR teams. Reinhart Oil gets a huge customer, and all the advertising signage (racecars and dealerships) and makes enough profit selling oil to the auto group to pay for the sponsorship.

And since Forney is a smart guy, he also introduces Reinhart Oil to Timm Truck Leasing who is also a sponsor of his NASCAR organisation. Because Timm Truck Leasing has to buy oil, and Reinhart Oil uses trucks to deliver their stuff. So they help each other out. And Forney builds good will between himself and two of his partner/sponsors. A classic B2B deal.

Alan

You scratch my back, I'll scratch yours.......love how business works! I'm sure this is how/why DHL is on 2 fuelers

 

[none]

Going back to my example of firing a sponsor. One other thing that needs to be considered, not every sponsorship is a full boat deal.

Forney Racing is running a Funny Car self sponsored by Forney Manufacturing (man, that Forney guy has a lot of businesses) He is running a conservative program and spending 1.5 million a year. Now, my company Wild West Engineering calls and says: "I would like to be on your team and I have 500,000 to spend." Forney takes my money and my name goes on the car. I may use him in my ads and he mentions me when he does interviews. I don't own the team, and I'm not covering the full expense, but when I come to the track, or one of my customers comes out we get the VIP treatment as part of the team. All Good!

Then when I start making requests or demands as outlined above that's where the trouble sets in. And at some point Forney has to decide is the $500,000 is worth the headache I'm giving him.

One thing I learned long ago and have never forgotten, in every deal you make you have to figure in the aggravation factor. I know from being in business for a while now, that some customers are more grief than they are worth. And you either have to charge extra, or pass on the work.

True story, there is another guy in Tucson that does the same type of work I do and he is good at it. Better than I am if you want the truth. We know each other well and have often referred customers to each other when it makes sense. He called and told me that I would be hearing from a guy about a project and that the guy was a pain. Called twice a day, nit picked everything, changes his mind and expects no extra charge. always wanted to pay less than the agreed amount, I'm sure you guys all know someone like that.

So the guy calls and tells me what he needs, I tell him it's going to cost $2,500. He says "I talked to the other guy and he will do it for $2,000." I told him to have the other guy do it, he'll do a great job and you will save $500. (Knowing full well that he is lying to me) He asks again if I can do it for $2,000. I told him that I would not do the job at all, not at any price. He gets pissed and starting telling me that I don't know how to run a business, etc.

I told him that my point of view was this. All he can do is tell people that I'm a jerk because I refused to work for him. I can live with that. But if I do the job, he will tell everyone who will listen that I did a lousy job and that I charged him too much for it. The headache wasn't worth the $2,500 to me. He found a guy in Phoenix to do the job, and he will be happy to tell you to this day that the guy took too long, charged too much and did a crappy job.

Alan

 

[Cliff]

Alan, thanks for the insight. I learned a lot about stuff I never knew.

 

[none]

Here's an example everyone should be able to relate to. Forney Field needs a new scoreboard could be a college, high school, doesn't matter. They want a fancy one with hi-def graphics and a message board. It's going to cost 1 million dollars that the school doesn't want to spend.

Morgan Tire and Auto Service has 9 locations in the community and Morgan graduated from Forney so he wants to help. Morgan agrees to buy the new scoreboard in exchange for it being labeled with his company. Also, the stadium announcer will refer to the replay being shown on the "Morgan Tire and Auto Scoreboard" We've all seen that in some form, right?

But here's the part that isn't made public, as part of the deal for 5 years the school now will buy all of it's tires from Morgan Tire and Auto Service, as well as alignments, brake service, and whatever else that they would be paying someone to do anyway. The school gets the scoreboard, Morgan gets the advertising and the goodwill because everyone who goes to the school or graduated from it will want to support the guy who "Donated" the scoreboard. And Morgan gets the school's business.

Alan

 

[Jim]

Here's an example everyone shoul

Alan

Alan, (Mostly) Always enjoy your posts. Thanks for the "rest of the story" within the bounds of discretion". So many lessons can be learned by understanding "The 80/20 Rule"

 

[Professional Fan]

The article posted today about Tony Schumacher's new deal contains comments from Don that are right on point with some of Alan's comments regarding sponsorship is more than just the name on the side of the car.

 

[T.Smith]

One thing that has been left out, who is the head of marketing. Tough sell for sponsorship if they have no interest in motorsports.

Or has a lazy eye on another team, been there done that.

 

[65 Goatboy]

I was going to bring up the same point. There are small associate sponsors on NASCAR cars that you will hardly ever see at all, and they are paying more than a major sponsor for a fuel car. And, it's not just 4 seconds of airtime for an NHRA car...Having said that, the entire advertising model has changed dramatically for ALL motorsports, and teams really have to adapt.

Not a huge nascar fan but I enjoy their xm satellite channel. They are implementing major changes to lower the costs it takes to race. Initial investment high but long term they hope to keep multi-millionaires from throwing in the towel. One this year and another a few years ago. Their foresight and business model is very impressive compared to nhra.